Fujitsu Reports FY 2005 Financial Results
Strong Performance in Overseas Markets, Improved Earnings in Services Business Contribute to Sharp Increases in Operating and Net Income
Tokyo, April 27, 2006 — Fujitsu Limited, a leader in customer-focused IT and communications solutions for the global marketplace, today reported consolidated net sales of 4,791.4 billion yen (approximately US$40,605 million*) for fiscal year 2005 (April 1, 2005 - March 31, 2006), a slight increase over the net sales recorded in the previous fiscal year. Solid business results outside Japan, including robust sales of optical transmission systems in North America, outsourcing services in the UK, and hard disk drives in overseas markets, helped to offset sales declines in servers and PCs in Japan.
The impact of higher earnings in these areas, together with cost reductions from enhanced company-wide initiatives in manufacturing innovation and a major decrease in losses from loss-generating projects in the domestic Solutions/System Integration business through stricter business assurance and risk management, contributed to a 21.2 billion yen jump in consolidated operating income, to 181.4 billion yen (US$1,538 million). The increase in operating income, together with improvement in other income (expenses) and a lower income tax burden, enabled Fujitsu’s consolidated net income to more than double, to 68.5 billion yen (US$581 million), compared to 31.9 billion yen in fiscal 2004.
“Driven in large part by solid gains in our overseas business, which we see as key to our future growth strategy, as well as continued cost reductions from aggressive internal reforms, we were able to exceed the operating and net income targets that we set at the beginning of the fiscal year,” said Fujitsu Limited president Hiroaki Kurokawa. “We achieved higher operating profits in all three of our main business segments, as well as in each of our principal geographic regions outside Japan, and we also made good progress in improving our balance sheet, including meeting our debt reduction targets. I am determined to build on this momentum in fiscal 2006 as we strive for a new period of growth by leveraging our unique strengths to deliver value and IT-enabled innovation to the front lines of business and society.”
Business Segment Results
Consolidated net sales in the Technology Solutions segment, which includes system and network products and services, increased 1.7% over fiscal 2004, to 2,983.9 billion yen (US$25,288 million). Although sales of servers and related products declined in Japan, overall sales increased as a result of continued strong growth in overseas sales of servers, optical transmission equipment, and outsourcing services. Operating income for the Technology Solutions segment was 164.2 billion yen (US$1,392 million), a substantial increase of 22.1 billion yen over the previous fiscal year. The Services sub-segment was particularly instrumental in this result, as higher outsourcing services revenues in the UK and significantly lower systems integration project-related losses in Japan contributed to gains in profitability over the previous year.
Net sales in the Ubiquitous Product Solutions segment, which includes PCs, mobile phones, hard disk drives (HDDs), and other products, were 1,059.9 billion yen (US$8,982 million), an increase of 2.8% over fiscal 2004. Robust overseas sales of HDDs were a major contributor to this increase, while higher sales of PCs in overseas markets offset PC sales declines in the Japanese market. Operating income for the Ubiquitous Product Solutions segment was 34.4 billion yen (US$292 million), an increase of 3.1 billion yen compared to the previous fiscal year. Although the fall in the value of the yen against other currencies led to an increase in component costs, this impact was offset by cost efficiencies generated by manufacturing innovation initiatives, improved quality, and higher HDD sales.
Net sales of Device Solutions, which include LSI devices, electronic components and other devices, were 707.5 billion yen (US$5,996 million), a decrease of 11.0% compared to fiscal 2004. Excluding the impact of the transfer of the company’s flat panel display businesses last fiscal year, results on a continuing operations basis increased by 0.5%. In the LSI Devices sub-segment, memory sales decreased as a result of intensifying competition, but the market for logic chips strengthened from the middle of the fiscal year, especially in the mobile phone and digital consumer electronics segments. Operating income for Device Solutions was 33.3 billion yen (US$282 million), an increase of 0.7 billion yen compared to the previous fiscal year. Despite the burden of start-up costs associated with the new 300mm wafer semiconductor fabrication facility at the company’s Mie Plant, the transfer of loss-generating flat panel display businesses and strong results in the electronic components and other devices contributed to the slight improvement in overall profitability.
FY 2006 Projections
Looking to fiscal 2006, Fujitsu anticipates higher sales resulting from the introduction of new products, continued growth in overseas markets, and a rebound in IT spending in Japan. On a segment basis, the company forecasts higher sales and operating income for Technology Solutions, while intensifying competition and further investment to position the company for future growth are expected to restrain operating income growth in Ubiquitous Product Solutions and Device Solutions. In light of these and other factors, the company projects the following consolidated financial results for fiscal 2006:
Fujitsu Limited Consolidated Earnings Forecast for Fiscal 2006:
FY 2006 (estimate) | FY 2005 (actual) | Change
Net Sales 5,200.0 | 4,791.4 | +8.5%
Operating Income 190.0 | 181.4 | +4.7%
Net Income 80.0 | 68.5 | +16.7%
Complete information on Fujitsu’s FY 2005 financial results, including financial tables, explanation of results, and supplementary information, may be found at: http://www.fujitsu.com/global/about/ir/
*All yen figures have been converted to U.S. dollars for convenience only at a uniform rate of US$1 = 118 yen, the approximate closing exchange rate on March 31, 2006.
Fujitsu is a leading provider of customer-focused IT and communications solutions for the global marketplace. Pace-setting device technologies, highly reliable computing and communications products, and a worldwide corps of systems and services experts uniquely position Fujitsu to deliver comprehensive solutions that open up infinite possibilities for its customers’ success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of about 4.8 trillion yen (US$40.6 billion) for the fiscal year ended March 31, 2006.
For more information, please see: www.fujitsu.com
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